Thursday, January 25, 2007

I'm not a Pinko Commie, I Just Look Good in a Salmon Shirt

as does David Brooks (or so he thinks) ... it's a "David thing":

While I do not expect Marketplace to have other than a pro-business tilt, I do tune into that show, as it does tend to offer a fair and balanced picture of financially related news. However, last night's segment on Bush's health care proposal was about as unbalanced as you can get. Normally, in such situations, you can at least count on Robert Reich to provide some much needed perspective and balance, however, in seeking to damn the President's health care proposal with faint praise, even he displayed profound misunderstandings of health care economics. Reich claimed that it is important to decouple health insurance from employment. However, even ignoring that this coupling, described by some as a Gordian knot, got tied the way it is for good and liberal reasons we liberals ignore at our own peril, Reich is deluding himself if he thinks that encouraging employers to drop health care plans is a step in the right direction.

Is Reich so far-sighted in approaching the laudable goal of a forest of universal health care that he misses the trees in front of him? For one thing, would employers necessarily pass on the money they would spend on health care to their employees? And, pace Reich, it isn't just high income employees who have health care: e.g., as a grad student, I had good health care, but if I had to pay that money out of pocket with the same income or even slightly more, it would, deduction for health care expenses or no, cost me more money than I could have afforded: after all, how much are tax deductions worth to low income folk?

And even assuming employers just give employees the money they would have otherwise spent on health care, how could employees afford anywhere near the same coverage they had before. Even ignoring whatever bulk discounts (large) employers may obtain or negotiate, by having employers purchase health insurance, there is automatic dilution of risk. If individuals purchase health insurance, most likely, even with a generous tax deduction, individuals whose risks are low, might make a rational decision to buy less involved health insurance which would leave the insurance companies needing to charge more for the rest of us. While some would suggest mandating health insurance (and what better way to get people more mad at the gummint than mandating health insurance), this would only make the demand for health-insurance inelastic (a concept Reich usually seems to understand, but apparently misses here) and hence increase all of our prices. Having employers buy health insurance creates the necessary pool of insured for expenses to be spread around, which is the point of insurance anyway, without lowering the elasticity of health insurance demand (as an employer can always decide health insurance is too expensive of a benefit).

Our current system may be way broken, but increasing the "privaticity" of the system by dis-incentivizing even employer provided "bulk" health care, is not a step in the right direction, even if it unties the Gordian knot of health care delivery. Increasing the "privaticity" of something to lead to an outcome of a publicly provided service actually sounds about as silly as Lenin's "increasing the contradictions" -- and the last thing liberalism, long accused by rightists as being Communism-lite, needs is actual Communist approaches providing our strategy.

What liberalism does need in order to continue to be a vital and much needed force, on the other hand, is a sense of its own history and how we achieved our past accomplishments, which have done so much good for society. And part of that story is actually employer provided health care and the other union-negotiated benefits that created modern middle-class America. Is this creation imperfect? Yes. Do liberals have good ideas as to how to make things better? Yes. Call me a cliche-abusing conservative though, but we liberals must not be so cavalier about flip-flopping regarding our own accomplishments and throwing babies out with the bathwater.

So as far as health care is concerned, let us not even give the one cheer Robert Reich is prepared to give to Bush's plan, mistaking it for a step in the right direction or out of sheer Leninism. Our health care system needs change ... but encouraging employers to get rid of health care for employees: i.e. for working people for whom the system comes close to working, is only going to encourage those people to view all liberal ideas as being destructive of what little works for the working man and woman. And people wonder why we liberals lost the working class vote? It has nothing to do with social issues and everything to do with history-blind quasi-Leninists who in seeking much needed changes for the system, don't take adequate time to figure out how we even got to the place where we are today, which consideration is necessary to avoid repeating the mistakes of the past on the one hand but also to avoid throwing the baby out with the bathwater on the other.

Update: actually, whether I look good in various shades of pink has become the subject of debate. Some claim that red-heads such as myself, looking good in muted green, also look very good when that muted green is offset by pink. Others claim that pink does not look good on red-heads, even when worn in combination with muted greens and greys, and I am no exception.